Health Care Reform And Preexisting Conditions

by Pejman Yousefzadeh on October 18, 2009

When you hear stories about how Democrats are going to end discrimination against those with preexisting medical conditions in any coming health care reform package, be sure to keep your sense of skepticism handy. This story indicates that while discrimination against people with preexisting conditions will become more subtle in nature, it will be discrimination just the same:

Get in shape or pay a price.

That’s a message more Americans could hear if the health care reform bills passed by the Senate Finance and Health committees become law.

By more than doubling the maximum rewards and penalties that companies can apply to employees who flunk medical evaluations, the bills could put workers under intense financial pressure to lose weight, stop smoking or even lower their cholesterol.

The initiative, largely eclipsed in the health care debate, builds on a trend that is already in play among some corporations and that more workers will see in the packages they bring home during this month’s open enrollment. Some employers offer lower premiums to people who complete personal health assessments; others offer only limited benefit packages to smokers.

The current legislative effort takes the trend a step further. It is backed by major employer groups, including the U.S. Chamber of Commerce and the National Association of Manufacturers. It is opposed by labor unions and groups devoted to combating serious illnesses, such as the American Heart Association, the American Cancer Society, and the American Diabetes Association.

President Obama and members of Congress have declared that they are trying to create a system in which no one can be denied coverage or charged higher premiums based on their health status. The health insurance lobby has said it shares that goal. However, so-called wellness incentives could introduce a colossal loophole. In effect, they would permit insurers and employers to make coverage less affordable for people exhibiting risk factors for problems like diabetes, heart disease and stroke.

“Everybody said that we’re going to be ending discrimination based on preexisting conditions. But this is in effect discrimination again based on preexisting conditions,” said Ann Kempski of the Service Employees International Union.

[. . .]

Under current regulation, incentives based on health factors can be no larger than 20 percent of the premium paid by employer and employee combined. The legislation passed by the Health and Finance committees would increase the limit to 30 percent, and it would give government officials the power to raise it to 50 percent.

A single employee whose annual premiums cost him and his employer the national average of $4,824 could have as much as $2,412 on the line. At least under the Health Committee bill, the stakes could be higher for people with family coverage. Families with premiums of $13,375 — the combined average for employer-sponsored coverage, according to a recent survey — could have $6,687.50 at risk.

An amendment passed unanimously by the Health Committee would allow insurers to use the same rewards and penalties in the market for individual insurance, though legislative language subsequently drafted by the committee’s Democratic staff does not reflect that vote, Sen. Mike Enzi (Wyo.), for the committee’s ranking Republican, has said. The bill drafted by the Senate Finance Committee would set up a trial program allowing insurers in 10 states to use wellness-based incentives for individuals.

If this isn’t discrimination based on preexisting conditions, I don’t know what is. Of course, it makes a great deal of sense to demand that people take care of themselves and give them financial incentives to do so; part and parcel of any insurance program is the incentive to be a good and responsible insured party. But health care reform was sold to the American people not so much as an insurance program in which the insured party had responsibilities to fulfill, but as a safety net that would take care of all.

The safety net approach does not appear to be prevailing, however. It will be interesting to see if this story gets traction and if Democrats–who decried the use of preexisting conditions to discriminate against insured parties will now raise a stink, given that both the Health and Finance Committees in the Senate have come out with legislative packages that encourages just that. If the Democrats have any sense of consistency about their outrage, the raising of a stink should not be long in coming.

By the way, someone should directly ask President Obama what he thinks about all of this.